An assessment of corporate responsibility efforts in China has produced a litany of low scores, dominated by foreign firms. But the mere fact China is measuring is a great leap forward

Sustainable business is a concept the Chinese government has started to talk about.

CASS’s corporate responsibility Blue Book covers the top 100 state-owned, private and foreign companies in China, scoring them on a 100-point scale and comparing them to international corporate responsibility indices, the Domestic Corporate Responsibility Initiative and the corporate responsibility Evaluation Package of the World’s Top 500.

CASS found that the average score of all 300 companies was only 19.7 and that 205 of them are what Wang Suyue, secretary of the social development institute of CASS, describes as “bystanders” – in reality doing nothing. CASS took these low scores to indicate that the overall level of corporate responsibility in China is still low.

According to CASS it was foreign companies that scored lowest. In total, 19 foreign companies, including Adidas and Coca-Cola, scored zero or even below zero. The reasons for these low scores are interesting (though the foreign brands have, when they’ve commented at all, disputed the findings). CASS says the low scores were due to low levels of disclosure on corporate responsibility development, anti-commercial bribery, corporate environmental management, energy conservation, pollution control and emission reduction.

Brand disclosure

Lack of disclosure by high-profile western brands has been repeatedly raised as a problem in China – for instance, Apple (enjoying booming retail sales in China) found itself slammed in a report from an alliance of 36 Chinese environmental groups called the Green Choice Initiative. The report criticised the impact of global brands on China’s environment and highlighted their apparent lack of transparency.

Jonathan Watts, the Guardian’s east Asia environment correspondent, highlighted in February 2011 to Ethical Corporation the problems Apple and other gadget makers had in Suzhou, with a Chinese supplier of touch screens using poisonous chemicals. That became a nationwide scandal in China but, Watts says, while journalists found representatives of other foreign firms helpful, Apple remained “aloof”.

This was a re-run of Apple’s unhelpful attitude around the heavily reported issue of the worker suicides at the giant Foxconn complex in Shenzhen, which makes parts for Apple and other foreign brands. It has attracted much comment, including from Leslie Chang, the author of the much praised book Factory Girls.

Green Choice found Apple the “least willing foreign company to provide data or to answer questions about suppliers”. Similar charges of “aloofness” and lack of disclosure have been levelled recently at both Wal-Mart in Chongqing over mislabelled organic pork and Gucci suppliers in Shenzhen where workers were reportedly forced to stand for 14 hours a day and denied toilet breaks. Gucci, owned by French giant PPR, says it had engaged external experts to conduct a review of what had happened, but the reputational damage was done.

Shift to charity

The other reason for low scores has been the trend – which Ethical Corporation first highlighted in its 2010 briefing on China – away from corporate responsibility programmes and education towards more basic philanthropy.

In March 2010 we noted: “Increasingly foreign companies have sought to become good corporate citizens in China as they both manufacture for export and try to tap into the growing domestic market for their products and brands. This has meant that while, perhaps five years ago, most companies focused their corporate responsibility activities on working conditions, they are now moving closer to the Chinese model of stressing community investment and philanthropy.”

This trend has only grown since then as companies have sought to ensure good relations with Beijing in return for access to the domestic market.

Chen Jiagu, the director of CASS and the lead author of the Blue Book, thinks Chinese companies are getting better at corporate responsibility – the top 100 state-owned enterprises (SOEs) performed best with an average score of 32.8, despite 50% being labelled as “bystanders”.

There are reasons for the improvement in Chinese companies. The Blue Book highlights the introduction of company management development plans dealing with anti-commercial bribery regulation. Most Chinese companies now have these, at least on paper.

Additionally, it measures a company’s social security coverage as well as health and safety training. As the government has mandated much tighter regulations on social security recently, companies have been forced to adhere to this area of regulation where before it was widely flouted.

Social harmony strategy

For Chinese companies, corporate responsibility is now seen within a particularly Chinese political-economic context. Repeated Chinese employers have told Ethical Corporation that, for them, the major corporate responsibility task of 2011 was to avoid redundancies and to maintain employment opportunities.

In part this is encouraged by a government that does not currently provide, or wish to provide, more than a rudimentary social welfare net. Several employers saw their corporate responsibility actions in this regard as outgrowths of both patriotism and a renewed sense of Confucian thought, and filial duty to employees. China is currently undergoing a revival of basic Confucian ideas, in part prompted by the government’s desire for people not to rely on the state.

This approach is perhaps the start of “corporate responsibility with Chinese characteristics”, but it is certainly in tune with the government’s dominant policy of “he xie”,or harmony. Of course he xiemeans workers not making demands against the government, too.

In general terms it is fair to say that the trend in Chinese corporate responsibility Ethical Corporation observed two years ago is growing. Rather than outbidding each other on philanthropic donations Chinese companies are turning their attention to the activities typified by foreign multinationals in China that are both broader and also welcomed by the government – good corporate citizenship. At the same time, international companies are including some more philanthropic aspects in their programmes.

As yet these campaigns remain almost wholly dedicated to helping people in China rather than internationally, reflecting a patriotic edge to most corporate responsibility work in China – he xie again. This has continued to be the trend of both foreign and domestic companies – though, as the case studies demonstrate, it is Chinese companies that have broadened and extended their citizenship and community programmes best.

Case study: China Mobile

China’s largest and essentially only mobile phone service provider is an extremely well known national brand, registering 100% recognition with the public. It is also a listed company with interests in Hong Kong and other Asian countries.

In common with many other Chinese companies, China Mobile has chosen to focus on children. The company’s 12.1 Love Foundation concentrates on issues of child poverty, children without parents and, slightly more controversially in China, Aids infection among the young.

The programme is run in conjunction with the China Women Rights Association (a state controlled body). The project was launched in late 2010 with a forum – the China Mobile Rights of the Children Care Action – held in Beijing. This led to involvement with certain orphanages across China and also to the creation of the Mobile Market Youth Entrepreneurial Programme, which offers entrepreneurship opportunities in the form of competition, training, and online participation, run in conjunction with the central committee of the Communist Youth League.

It is fairly obvious that these programmes are both state-sanctioned and targeted at China Mobile’s key customer group – youth. China Mobile is promoting it via its 540 million customer base using a mixture of digital media. In several public polls rating corporate responsibility and charity initiatives, the China Mobile programme has scored highest in terms of awareness, showing the power of mobile marketing at least.

Case study: Mengniu Dairy

Mengniu’s corporate responsibility programme comes at a time when the reputation of the Chinese dairy industry could not be lower both nationally and internationally following a succession of scandals about tainted milk.

So, there is an urgent need to establish trust with the consumer. Mengniu, one of China’s largest and best-known dairies, and one of the few to operate nationally, has chosen to highlight green issues as part of its corporate responsibility programme.

Obviously the emphasis on natural, organic, health and pure –all words associated with its corporate responsibility programme – is designed to help restore trust in the product category and Mengniu. Eco-Action, Help China was established in 2010 and has involved a roadshow exhibition to smaller towns and villages, Mengniu’s key growth market for dairy products, across China. These demonstrate the latest green tech innovations.

Additionally, the campaign features a carbon test, both as part of the exhibition and online to allow people to calculate their own carbon footprint. Mengniu extended the programme with the “Recycle Package, More Environmental Protection” scheme. Recycling consumers receive coupons that can be exchanged for packages of milk at selected Wal-Mart stores in five major cities.

In general, consumers in China, naturally wary of food scandals and contamination, associate green with better safety. By linking their corporate responsibility activities to green issues Mengniu is also attempting to reassure customers regarding its own product safety.

Case study: Coca-Cola

Coke’s Live Positively campaign began in 2010 and ran through 2011. The campaign covered seven areas: beverage benefits, healthy living, water stewardship, sustainable packaging, climate, community and the workplace.

Crucially it was not jus a brand exercise but involved the company’s manufacturing facilities across China – Swire Beverages, Cofco Coca-Cola Beverages, Coca-Cola China Industries and Zhuhai Coca-Cola Beverage Co.

An emphasis on water quality was playing to consumer concerns over the environment and possible adverse effects of drinking bad water following a series of environmental disasters and product contamination issues.

The campaign, by demonstrating Coke’s water-saving activities as well as detailing its water treatment and purifying policies, was partly designed to put the public’s mind at rest as well as educate consumers about water issues in China.